The Bangko Sentral ng Pilipinas (BSP) has increased to $2.4 billion its multilateral and bilateral borrowing contribution to the International Monetary Fund (IMF) after it has doubled its participation in the New Arrangements to Borrow (NAB), the IMF's credit facility.

Based on the BSP report, the $2.4 billion lending facility to the IMF is comprised of $1 billion NAB commitment, another $1 billion as Bilateral Borrowing Agreement and $400 million in the Financial Transactions Plan (FTP). 

According to the BSP, it has doubled its NAB commitment from Special Drawing Right (SDR) 340 million or $500 million to SDR680 million or $1 billion.

The Philippines, through the BSP which in its own right is an IMF creditor member, has always maintained a floor participation of SDR340 million in the NAB since joining it in 2010. In January this year, however, the IMF reformed the NAB and increased its size to $521 billion.

Besides the NAB, the BSP has a $1 billion BBA with the IMF and participates in the FTP with $400 million.

The terms for both the NAB and BBA have been extended by the BSP up to 2025 for NAB and end-December 2021 for the BBA.

The NAB, which is the IMF’s second line of defense after quota payments of members, is an arrangement where the BSP provides resources to the IMF while the FTP is a currency exchange arrangement between the IMF and selected IMF members.

The IMF also gets its money from BBAs, its third line of defense. The BSP said the BBA is the central bank’s commitment to provide the IMF with up to $1 billion in resources “to finance arrangements for countries with balance of payments difficulties.”

The BSP’s quota subscription to the IMF amounts to SDR2.04 billion or $2.9 billion as of 2016 which its last quota increase, while its SDR holdings is SDR856 million or $1.22 billion. The SDR is the IMF’s currency and quotas are its main source of financing.

“The Philippines, through the BSP, facilitated its continuing participation on the IMF’s financing facilities to ensure that the (IMF) has sufficient firepower to address looming threats to global financial stability,” said the BSP.

The BSP also said that the “global and regional financial safety nets in place provided some support to anchor financial stability as enhancements were made to ensure responsiveness to the current needs of (IMF) members. In the event of balance of payments problem or liquidity difficulties, members can tap these financing arrangements which serve as an extra layer next to an individual country’s first line of defense – its GIR (gross international reserves) – to safeguard financial stability.”

The BSP earns interest at the SDR rate – currently 0.05 percent -- from its participation in the NAB. There are 40 IMF members in the NAB.

“Enhanced participation in these facilities is a testament to the strength of the country’s external position (sufficient international reserves, sound external debt management framework) despite the pandemic,” said the BSP.

The BSP first participated in the IMF fund sourcing in 2013. It became a creditor-member in 2010 after pre-paying its last IMF loans in 2006.

The BSP in the original document detailing the NAB contribution said that transfers under the credit arrangement will not have any impact on the country’s foreign exchange reserves because it will only result to a change in portfolio allocation. "There is no cash out for the BSP until the (NAB) is called," said the BSP.

The BSP has a previous $1 billion Note Purchase Agreement with the IMF which lapsed in 2019.